Amazon To Witness Continued Growth in AWS and Retail Expansion in 2016

Amazon has been making quite positive gain lately with high ambitions in 2016 as well.

Year 2015 has proved to be a good year for the e-commerce company Amazon.com, as the stock surged by as much as 110% during the year. Additionally, analyst Shyam Patil from Susquehanna Bank believes that this trend is likely to continue this year as well; he supported this theory by the fact that Amazon and Amazon Web Service (which is the cloud division of the company) will contribute to increase the company’s stock.

Shyam Patil stated when talking about the web cloud service that it has experienced accelerated growth throughout. A 27% year-over-year growth was witnessed in that division during the third quarter of fiscal year 2015 whereas a year-over-year growth of 24% and 20% was witnessed during the second and first quarter for the current fiscal year. In 2015, an overall growth of 78% YoY was seen mainly because over 500 innovative features were introduced to the cloud service.

AWS has contributed a lot to the cloud industry despite the fact that it is still an early stage growing market. The cloud industry has seen a growth of as much as 54% in the third quarter of the fiscal year 2015 in which 21% was contributed by AWS. Many believe that Amazon can see higher growth if it makes the AWS available in more geographical regions. Presently, it is operational and working in over five countries, which indicates a 1% market penetration.

According to recent announcement, the service is expected to establish its hub in Montreal, Canada, which is being established there because it plans to aim markets that have not been target yet. It will be made available in 43 zones across 17 different global regions, which mostly include high enterprise markets, including the United Kingdom, India and South Korea. This expansion initially will result to an increase in capital expenditure due to which the company’s margins might be stressed but in the long run, it will lead to high sustainable future revenue and further growth for the e-commerce company.

On the other hand, the retailer currently dominates the e-commerce market with over 3 million customers added to Amazon Prime during the holiday season last month. Additionally, good news for the company is disclosed, according to which Amazon China has been officially registered with Federal Maritime Commission (FMC). With the news of air cargo last month, it is safe to say that Amazon will be controlling its own global supply chain network now.